If you’ve never watched “Shark Tank” on ABC I highly recommend it, both for its entertainment value and as a lesson in what is important and what is trivial in business building and business transactions.
Shark Tank has been on TV since 2009 and is a variation of “Dragon’s Den”, a similar show, that has been on Japanese TV since 2000 and in England since 2005.
On this show various entrepreneurs present their businesses and ideas to a group of very successful entrepreneurs and investors (the “Sharks”) who may offer the arising businesses investment money for some equity in their business. This show has attracted a loyal audience over 11 seasons and over 222 episodes.
The highlight of the show is the appearance of every kind of business idea imaginable before a panel of “sharks” – savvy investors who ask probing questions to determine if they should invest in the business being presented before them.
How does Shark Tank relate to a privately owned insurance agency?
Besides the entertainment value of the products and services being offered and the grilling each entrepreneur gets from the sharks before offers are made (or not) to invest in their companies, the key idea that you get about the concept is that YOU MUST KNOW THE METRICS OF YOUR BUSINESS OR IT IS SIMPLY YOUR PROFESSION, NOT A VIABLE BUSINESS.
There is nothing wrong with being skilled, caring and knowledgeable insurance agents who have gathered assistants and administrative staff around them to better serve their clients. But these skilled professionals will feel stress growing as they serve an ever-increasing client base until it becomes intolerable. Regardless of how many or qualified the agents’ staffs the heavy load and responsibility rests directly on the agents’ heads.
When asked to consult with these agencies we see the common issues of perceived inability to take vacations and, when time off is taken, the agency owner is constantly on the phone putting out fires and managing his business. While more common in small agencies you would be shocked how many agencies at and over $1 Million revenue (commissions) also fall into this category.
Eventually the stress takes its toll and agency owners in their late 50’s and 60’s feel burn-out and seek relief through retirement or bringing in partners (who are usually in the same mold as the current owner and will become the next generation’s burn-out.
While there are a myriad of ownership, management and delegation woes that pursue these agency owners, a surprising commonality is the lack of METRICS within the agencies of journeymen insurance agents who have never honed the entrepreneurial or management skills that separate the “Insurance Agent” from the “Agency Owner”.
The Insurance Agent:
Takes pride in properly insuring the clients and being there for any incident or insurance need that might arise.
Is primarily concerned with the knowledge base that the owner and the staff achieve in support of their profession and for their clients.
Tailors every insurance program with office standardization as a secondary consideration. Has no written procedures because “Do the Right Thing for the client is the primary consideration.”
The Agency Owner:
Takes pride in the growth of the business through the consistent satisfaction of the clients and carriers with the agency’s (not just any one person’s) performance.
Considers product knowledge and excellent customer service simply as the key tools to keep the engine of the agency running smoothly as it grows and achieves a fair profit on the owners’ investment. Knowledge and service levels are not the end goal in themselves — they are the means to the end goal.
May go to extraordinary measures on behalf of a client, but recognizes that process and procedures are key to the productivity of employees that will earn the owners their business profit as they grow.
Shark Tank points out that if you don’t know your own metrics – in detail – you don’t know your business and are unlikely to succeed in any business plan besides trying hard and doing your best every day. While that frame of mind is perfect for a miner digging for gold, it is not the right strategy for the mine owner trying to determine what direction to dig, testing to see if the yield is profitable and determining where to put his human assets to best serve the profit goal of the owner.
For the reasons above, when we speak to an agent for the first time we urge them to invite us to do a GPP (Growth, Productivity, and Profitability) Analysis as our first intervention in their agency. Three things happen as the result of this effort.
- We find our how much the agent already knows about his business. The questionnaire that we send to be completed tests the agent’s knowledge of the business and, if they don’t know, the gathering of data to support the analysis will act to teach the agent a great deal about the history and current status of the business.
- We gather the data needed to analyze the history and present position of the agency. Using the data gathered (or gathering the data ourselves from the system, owners or staff) we identify the trends and personality of the agency in every key area of agency performance.
- We visit the agency already knowing its metrics. BUT YOU CAN’T ANALYZE A BUSINESS FROM AFAR. In most agencies, the present and future of the business is defined by the culture of the agency and the personalities of the employees. For that reason anyone who offers you a book or a workbook that is supposed to tell you your strengths and weaknesses and formulate a plan of action for the future is selling you a ‘Fool’s Dream’. Our consulting visit is specifically to learn the culture of the owners and the strengths and weaknesses of the employees and systems currently employed in the agency.
- KNOWLEDGE WITHOUT A PLAN IS MENTAL MASTURBATION, satisfying to some extent, but leaving you without a permanent solution to help you achieve your long-term goals. Our consultations are geared to provide you rock-solid recommendations AND the means by which to address those recommendations toward YOUR (not our) goals for the business.
- A PLAN WITHOUT IMPLEMENTATION AND FOLLOW UP (see 4, above). One of the things that we cannot do is force implementation of any plan. But we will offer you implementation assistance and follow up for as long as needed to make sure that the time and money invested in creating the Plan has been well-spent.
What Shark Tank teaches us is that not everyone is an entrepreneur. Some of us are going to be successful insurance agents and there is absolutely nothing wrong with that. The key to success is to avoid taking on so many clients that we overload our own capacity for comfortable workload and our agencies become our Masters instead of the tools that support our personal and financial goals.
However, many agency owners imagine themselves as both insurance professionals AND business entrepreneurs, growing profitable ventures through sales and business acquisition to provide a comfortable living during our productive years and a great retirement when the time comes to ‘cash out’.
If you imagine yourself an entrepreneur you must KNOW YOUR METRICS and use them to control and fine-tune your organization to maximize your success without stress. Every client that we consult will end up with a MIS (Management Information System) that will tell them their performance on a daily, weekly, monthly and Year-To-Date basis along with comparisons of this year to prior year and to budget expectation. This system, different for every agent based on the agency owner’s ranking of importance of key information, will allow you to Plan and implement change with constant measurements of how those changes affect your metrics. Whether you use our services or DIY (Do It Yourself) the metrics are the ingredients that permit you to know whether you are a SHARK or you are Shark-bait.
To discuss this with us please call Al Diamond at 856 779 2403 (al@agencyconsulting.com) .